The Risks of Go-Anywhere Bond Funds

'Unconstrained' Funds Limit Interest-Rate Risk, But Can Suffer in Other Ways

Investors are getting a hard sell from mutual-fund companies on so-called unconstrained or go-anywhere bond funds.

The pitch: The three-decade bull market in bonds is over, and as interest rates rise, regular bond funds will lose money. These go-anywhere bond funds, they say, will aim to make money while the once safe haven of traditional bond...